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Technology Stocks : Net Perceptions, Inc. (NETP) -- Ignore unavailable to you. Want to Upgrade?

To: bernieb2 who wrote (2531)	7/23/2000 1:11:10 PM
From: Carl R.	Respond to of 2908

Now there I can agree. In time the others will be "fairly" valued as well. I think in time the valuations will equalize. The one advantage to being overvalued is that it presents some unique opportunities. For example when a company is overvalued it has an opportunity to do secondaries or to do stock based acquisitions. Many times there have been wall street darlings that have used their overvalued currency to fund a spree of acquisitions, which leads to dramatic growth and usually to a rising stock price - for a time. CSCO is a recent example of a company that has done this successfully, but the market is replete with examples where the weight of all the acquisitions eventually brought the acquisition spree to an end. Examples that come to mind include: USF (US Filter) - in 1995-1996 used the fact that it's stock traded at a higher PE ratio than the industry around it (water) to go on an acquisition spree. After struggling it fell from a high of 44 to about 10. bigcharts.com SRV - SRV managed to take it's funeral home business global and into the S&P 500 before it's acquisition spree came to an end. A competitor, Lowen, ended in bankruptcy. bigcharts.com RWY, RNT and RCII - Three rent-to-own companies trading at a much higher PE ratio than the industry went on a huge acquisition spree in 1995-1998 before suffering. bigcharts.com bigcharts.com Basically what happened to these companies was that their PE eventually moved closer to the industry norm, and they had to deal with growth pains from all the acquisitions. CSCO has done better because they have done a remarkable job of integrating the acquisitions, of selecting acquisitions, and of managing the businesses after acquisition, plus the industry they are in has continued to grow rapidly and to have a high PE. As some have pointed out, one of the things that could happen to NETP is that one of the overvalued competitors could use their overvalued stock as currency to acquire NETP. I will point out that NETP did do a nice job of timing their secondary, assuring that they have plenty of cash on hand to grow and expand. One way or the other the valuations will eventually equalize, and one way or the other NETP stock will rise if the company continues to perform. Carl